Bank-Issued
Securities
Savings Institution-Issued Securities
Statute: § 551.22(3),
Wis. Stats.
Used for: Securities issued by and representing an interest in or a debt of federal or
state-chartered banks or state-chartered savings institutions or trust companies.
Note: The need for obtaining a registration exemption under state securities
law for offers or sales of securities issued by a national or state-chartered
and supervised bank or banking institution is eliminated by preemption
language in the National Securities Market Improvement Act of 1996 (effective
October 11, 1996) ("NSMIA").
See § 18(b)(4)(C) of the Securities Act of 1933 which cross-references
§3(a)(2) thereof.
Filing requirement: Self-Executing. No filing or Consent to Service of Process is
necessary in order to claim this exemption.
Administrative Code references: §
DFI-Sec 2.01(2), Wis. Adm. Code.
Frequently asked questions:
Q: Is the exemption self-executing?
A: Yes. No filing or Consent to Service of Process is required.
Q: Are there any criteria the institution must meet in order to qualify for this
exemption?
A. Yes. If the institution is state-chartered, it must be subject to regulation with
respect to the issuance or guarantee of its securities by a governmental authority of the
state under which laws the institution is organized.
Q: Is an irrevocable letter of credit from a national or state bank considered a
"guarantee" for the purposes of this exemption?
A. No. See 12/22/95 letter
re: Robert W. Baird & Co., Inc.
Q: Do industrial loan companies (ILCs) qualify for the exemption?
A. Yes, if the ILC engages in the business of banking
as defined under the laws of its home state. See 12/28/94
materially identical opinions re: Smith Barney CD program and Dean Witter
Reynolds CD program.
Q: If a bank is not organized under the laws of the United States or a state, but is
subject to the federal or state government's regulatory authority, may it qualify for this
exemption?
A: No. Wisconsin's exemption includes only securities
of a bank organized under the laws of the United States or of a state.
See 12/28/88 letter re: State Bank of India.
Important interpretive letters:
12/22/95 letter re: Robert W. Baird &
Co., Inc. "Bank Security" registration exemption is
not applicable to private-entity issuers covered by an irrevocable letter
of credit from a national or state bank. A bank letter of credit is not
a "guarantee" for purposes of the registration exemption of
§ 551.22(3), Wis.
Stats. It is a basic canon of statutory construction that exemption
provisions are to be narrowly construed. The difference between a letter
of credit and a guarantee is that, with a guarantee, the obligation of
the guarantor derives from the initial obligation, and the guarantor has
all the defenses which the maker of the debt obligation has--neither of
which elements is present under a letter of credit arrangement.
12/28/94 materially identical opinions re:
Smith Barney CD program and Dean Witter Reynolds CD program. Certificates
of deposit issued by industrial loan companies not domiciled in Wisconsin
qualify for the use of the exemption under §
551.22(3), Wis. Stats., since the ILCs engage in the business
of banking as defined under the law of their home states, and the FDIC
considers them "state banks."
12/28/88 letter re: State Bank of India.
Exemption set forth in §
551.22(3), Wis. Stats., is not applicable to certificates of
deposit issued by the Bank of India, which is regulated by the Federal
Government of India. The bank is neither "organized under the laws
of the United States" or "organized under the laws of any state,"
as required under the exemption.
11/8/85 letter re: The Derby Savings Bank. Common stock offering pursuant
to a conversion plan (from mutual to stock form of organization) is exempt
from registration under §
551.22(3), Wis. Stats.
10/5/83 letter re: Great American Federal Savings Bank. A federally chartered
mutual savings bank cannot receive the exemption set forth in §
551.22(3), Wis. Stats., because federal savings banks are not
regulated as banks, but are regulated as savings and loan associations.
4/3/81 letter re: Continental Industrial Bank. The certificates of deposit
and savings accounts of Continental Industrial Bank, a banking corporation
incorporated under Colorado Law, which engages in business substantially
confined to banking, are securities exempt from registration under §
551.22(3), Wis. Stats.
12/17/80 letter re: First National Bank of Neenah. Mortgage pool participations
of bank-originated mortgages are not exempt under §
551.22(3), Wis. Stats., because loan participations do not
constitute securities "representing an interest in or a debt of,
or guarantee by, any bank . . . , " as is required by §
551.22(3), Wis. Stats.
History: Adopted on January 1, 1970. Differs from the Uniform
Securities Act § 402(a)(3) in that §
551.22(3), Wis. Stats., expressly states that the institution
must be subject to regulation in respect of the issuance of guarantee
of its securities by a governmental authority of the state under which
laws it is organized, if it is a state rather than federal institution.
Has remained essentially unchanged since its adoption in Wisconsin.
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